BRICS refuses to side with US in showdown with Iran

NEW DELHI: India and China have defiantly declared their intention to continue trading with Iran, rebuffing US attempts to force them and other countries to cut economic ties with Tehran over its nuclear programme.

As both countries raised a banner of revolt at the US-led efforts to economically strangle Iran, they received support from Russia, South Africa and Brazil, in what could resonate around the world as a flexing of muscles by the BRICS powers, the new grouping of emerging powers whose leaders are holding their fourth summit meeting in Delhi this week.

While India and China have reasons to chafe at the US, not least because Iran is a big source of oil to their economies, the apparent sympathy for their stand from the other BRICS countries could drive a wedge in the Western efforts to isolate Iran. Russia and Brazil are self-reliant in oil, while South Africa has other import sources, and all three have no particular reason to humour Tehran.

China minced no words in decrying what it said were attempts by the US to impose its domestic laws on other countries. Chinese Commerce Minister Chen Deming said his country, which imports 20% of its crude oil requirements from Iran, was "not obliged to fulfill any domestic law or rules of any particular country".

"We also do not want to see any negative implication of domestic rules of any particular country on the entire international community," Chen said at a joint press conference attended by all BRICS trade ministers on Wednesday. The trade ministers met a day ahead of a summit of their heads of the state.

Chen was referring to US threats to countries that are continuing to buy oil and other goods from Iran and financial institutions that facilitate such trade. The US and some European nations have slapped sanctions on Iran over its nuclear programme and have threatened action against those who engage with Tehran.

India, which imports nearly 12% of its crude oil requirement from Iran, said it will respect the sanctions 'imposed by the United Nations', coded-speak implying that it will continue to trade with Iran.

"We are sure that none of the countries are in violation of the UN resolution. The resolution doesn't forbid countries engaged in trading essential commodities and what is required for human good," Commerce and Industry Minister Anand Sharma said.

"We look at such issues (continuing trade with Iran) in a pragmatic manner while ensuring that we respect UN resolutions," Sharma said.

India, which has long civilizational links with Iran, also sees the country as an important source of energy supplies for its growing economy. Spiraling global oil prices amid rising geopolitical tensions are already taking a toll on the Indian economy, pushing up its oil import bill and dampening growth. The US-Israeli standoff with Iran has already lifted Brent crude to more than $124 a barrel, well above India's budget calculations of $115 a barrel.

The BRICS trade ministers also discussed the possibility of setting up a common development bank for emerging economies on the lines of the World Bank and decided to commission a feasibility study to explore its creation.

Such a bank was proposed by the BRICS academic forum that brainstormed ideas and proposals for the summit earlier this month.

"A joint group of experts may be announced at the summit meeting on Thursday to prepare a feasibility report for the proposed development bank," one official said, adding that an arrangement for extending credit within the bloc in local currencies through export-import banks may also be announced.

The group also discussed starting local currency trade through a currency swap mechanism, and an announcement is expected after the meeting of the heads of states.

The BRICS nations together command about 20% of world GDP and 17% of global exports. BRIC was an acronym first coined by Goldman Sachs economist Jim O'Neill in 2001 to highlight the rising clout of these emerging economies, but the grouping has become more formal and also expanded to include South Africa.

The trade ministers agreed that officials should work together to ensure that BRICS members enhance their trade, including of higher value added manufactured products, to support industrialisation and employment in their countries.

"The BRICS countries want to increase intra-regional trade from the current $212 billion to $500 billion by 2015," Sharma said.

The Chinese minister said his country would import goods worth $10 trillion over the next few years.